Consider a Call Option and a Put Option Both Written

question 69

Multiple Choice

Consider a call option and a put option both written on Neunlay, Inc. stock. Both options have a strike price of $20 and expire in one year. The stock of Neunlay, Inc., is currently selling for $20. In one month the stock will be at either $24 or $18. Assume the risk-free rate is 0 percent. Which is worth more - the put option or the call option?

• A) The put option is worth more.
• B) The call option is worth more.
• C) They are worth the same.
• D) There is not enough information.

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Definitions:

Hypothetical Group

An imagined or theoretical group of individuals created for the purpose of discussion, analysis, or experimentation.

Reliable

Consistently good in quality or performance; able to be trusted.

Observations

The action or process of closely monitoring or noticing something or someone, often to gather data or information.

Agreement

A mutual understanding or arrangement, often formalized, between two or more parties.